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It has taken a long series of severe mishaps to generate regulatory action aimed at improving corporate governance. In the push to reform the way publicly* owned companies are managed, it is essential to address structural issues that drive the behavior of the Board of Directors (BOD) and senior management team. *(While the companies are owned by shareholders, the executive teams treat company assets and employees as though they are personal property; they also employ compensation teams that ensure the CEO and entourage are compensated as though they are risk-taking entrepreneurs, but of course, without any of the downside risk. Hence, "performance" plans that are nothing but guaranteed excessive compensation plans) [more]

Recs

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After accumulating more than 1,000 shares on Friday (15 Feb), this one is in a wait and see mode until they report financial results (mid-March). SWHC share price has taken a beating lately. 52-wk high = $22.80, 52-wk low = $3.72, Current = $5+. Stock really took a hit when the company filed their form 8-K with the SEC in January and withdrew financial guidance (see link below). This announcement has the effect of magnifying perceived risk, which correlates with a lower share price. In their normal, and useless manner, analysts reacted by downgrading the stock. Kind of like staring at a pile of ashes and yelling FIRE.

Key Risks - Inventory levels are a bit high - Cash position is low compared with prior periods - Recently acquired Thompson/Center Arms (Near-term business integration effort and related costs) (They are likely to write down some of the acquired assets, a common occurrence following acquisitions) (Question of whether it was a good acquisition at a good price is yet to be proven) - High accounts receivable balance may indicate some pressure at the retail channels level

Key Strengths - Smith & Wesson is a highly recognized and very powerful brand that should help the company expand out of the current economic slump - Recently acquired Thompson/Center Arms will enable company to leverage the powerful S&W brand into long guns (rifles and shotguns) - Management has described a sound strategy for leveraging the S&W brand - Have had notable success selling their new line of Military and Police (M&P) weapons to state and local government police agencies - Have moved very quickly to exploit their Thompson acquisition, releasing new products at a recent show, thus demonstrating their ability to execute on their chosen strategy

One more item: A court battle is in the works regarding gun ownership in Washington DC. The outcome of this Supreme Court decision is expected to impact SWHC, but I cannot pretend to understand exactly how. Anyone care to enlighten me?

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Was digging deeper into Smith & Wesson Holding Corporation (SWHC) prior to investing real money and bumped into this site that shows institutional buy/sell activity on individual stocks. Shows that Institutional Buy/Sell ratio for SWHC was 98/2. Another firm with a very high Buy/Sell ratio is SAI. [more]

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As a former CPA and auditor, I have been so disgusted by the criminal behavior of America's business leaders that I began writing letters to my government representatives urging more effective regulation of capital markets. [more]